Question

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials: $ 219,000 $ 262,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 151,000 $360.000 $352,000 Inventory balances at the beginning and end of the year were as follows: Bax materials Work in process Finished goods Beginning of Year $ 57,000 ? $ 32,000 End of Year $ 40.000 $ 25,000 The total manufacturing costs for the year were $680,000, the cost of goods available for sale totaled $745.000; the unadjusted cost of goods sold totaled $663.000, and the net operating Income was $38.000. The company's underapplied or overapplied overhead Is closed to Cost of Goods Sold. Required: Prepare schedules of cost of goods manufactured and cost of goods sold and an Income statement (Hint Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)

Answer 1

1) Income statement

Sales		1055000
Cost of goods sold (663000-16000)		647000
Gross profit		408000
Selling and administrative expense
Selling expense	219000
Administrative expense	151000
Total Selling and administrative expense		370000
Net operating income		38000

Schedule of cost of goods sold

Beginning finished goods	33000
Cost of goods manufactured	712000
Cost of goods available for sale	745000
Ending finished goods	82000
Unadjusted cost of goods sold	663000
Less: Over applied overhead	-16000
Adjusted cost of goods sold	647000

Schedule of cost of goods manufactured

Direct material used
Beginning raw material	57000
Raw material purchase	263000
Raw material available for use	320000
Less: Ending raw material	-40000
Direct material used		280000
Direct labor		32000
Manufacturing overhead		368000
Total manufacturing cost		680000
Beginning work in process		57000
Total cost of work in process		737000
Less: Ending work in process		25000
Cost of goods manufactured		712000